Day trade
Trade view / 15 July 2015 at 8:54 GMT

USDCAD meeting could cause a correction lower

Analyst / PIA First
United Kingdom
Instrument: USDCAD
Price target:
Market price:
Background

USD Index
– The index continues to be mixed and volatile and there is no sign that this phase is coming to an end. Trying to track a bias in the USD has been virtually impossible as it continues to hold close to or within the daily Ichimoku Cloud. The medium-term outlook remains bullish but there is nothing to say we could not have a drive lower without affecting this long-term plan.

Lots of third-tier data releases before the Bank Of Canada rate decision and statement at lunchtime.

USDCAD – After reaching the 127.2% extension level of 1.2737 (from 1.1918-1.2562) there has been little net movement in USDCAD with daily spikes seen in both direction.

Yesterday, DeMark posted an intraday exhaustion count and the initial rally was sold into with the two, four and six-hour charts all posting bearish Outside Bars.

The one-hour charts looks to be forming a ‘diamond’ pattern that, after appearing after a rally, has a bias to break higher. However, there is ample scope for a larger correction without affecting the overall medium-term bullish bias.

An inside Head and Shoulders looks to be forming. Selling into the right shoulder close to 1.2780 offers the best risk/reward but is also the riskier trade. Selling a break of the neckline at 1.2720 and the measured move target is 1.2640

USDCAD steadily rising since mid-June
USDCAD Daily
 Source: Saxo Bank

USDCAD still relatively weak from longer-term perspective
USDCAD 5 years
 Source: Saxo Bank

Inside head and shoulders formation in the making
usdcad 1
 Source: Saxo Bank

Management and risk description

Parameters

Entry:  Looking to sell at 1.2780 (before Bank of Canada rate decision) or a break of 1.2720.

Stop: 30 pips from entry.

Target: 1.2640.

Time horizon: intraday.

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more
4y
John Shaw John  Shaw
All eyes are on Ottawa ( or Toronto ) for the 1000 AM EDT spiel. Could kick it over 1.28.... or hammer it down to 1.26. Got your dice ready?
Canada is continuing the recession from 2008 ( the vast majority of main street Canada never really left the 2008 downturn ) but cutting these interest rates does not seem to get people or companies to spend more.
Raising rates does effect the psyche though.
Stay tuned.

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